Masaryk university faculty of social studies

Recent Chinese Engagement in Africa

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4.3 Recent Chinese Engagement in Africa

4.3.1 Trade

Figure 1 reveals that China-Africa trade increased from $10 billion in 2000 to $91 billion in 2009. Since 2009, China has become Africa’s largest trading partner (OECD 2011). By 2011, the trade has increased 16 times to $166.3 billion (Smith 2012). China granted zero-tariffs for 60% of export commodities to the 30 least developed African countries and thus African exports to China increased from $56,8 billion in 2000 to $93.2 billion in 2011 (Embassy of PRC 2012b). In the measured period, the China-Africa trade deficit was not huge. Nonetheless, in 2011, the deficit grew rapidly.
Figure 1 - China-Africa Trade Volume 2000-2009 (billion USD)

Source: MOFCOM 2011

Figure 1 shows China’s Top-ten trading partners in Africa. Six of the countries are oil-rich countries and the remaining four with diversified economies. Angola and South Africa accounted for 39% of the total African trade in 2010. Altogether, these ten African countries constituted 76% of the total China-Africa trade. Between 2004 and 2009, raw materials made 90% of total African exports. In 2009, exported commodities made up of 64% of fuel, 24% of metals, 5% of food and agricultural products and 7% other commodities. On the other hand, China mainly exports processed goods. In 2009, 41% of the total exports constituted of machinery and transportation equipment, 20% of communications equipment, 19% of other manufactured goods and the remaining 20% were diversified (FOCAC 2011a).

Table 1 – China’s Top-10 Trading Partners in Africa in 2010 (million USD)

Rank	Country	Economic Type	Average annual trade, 2006-2010 (US $ million)	Share in total China-Africa trade
1	Angola	Oil export	18,627	21%
2	South Africa	Diversified economy	166,86	18%
3	Sudan	Oil export	6,445	7%
4	Nigeria	Oil export	5,774	6%
5	Egypt	Diversified economy	5,384	6%
6	Algeria	Oil export	4,155	5%
7	Libya	Oil export	4,154	5%
8	Republic of the Congo	Oil export	3,241	4%
9	Morocco	Diversified economy	2,548	3%
10	Benin	Agriculture	2,097	2%
	Weight of top ten trading partners in total China-Africa trade			76%

Source: FOCAC 2011a
In 2012, the total China-Africa trade was estimated to grow by $33.7 billion to $200 billion. The share of Chinese exports to Africa totalled 18%. While the imports of Chinese commodities grew by 5% in 2012, the exports of African commodities decreased by 26%. Due to the recession in the European Union (EU), the demand for Chinese imports decreased and therefore trade with Africa gained importance. Currently, Africa is the fastest-growing destination for Chinese exports (Hazelhurst 2013).

4.3.2 Foreign Direct Investment

Foreign direct investment (FDI) constitutes a deep motivation of one country for a long term involvement in another country. All African countries acknowledge the importance of inward FDI. FDI contributes to the economic growth and development of capital infrastructure (Frimpong 2012, 54). In 2004, Chinese FDI in Africa accounted for $317.4 million and by 2010, the FDI increased to $2.1 billion. In 2008, the Chinese FDI reached the highest level of $5.5 billion. However, in comparison with Chinese FDI to other regions, the amount was rather small. The Chinese FDI to Asia in 2010 accounted for $44.8 billion, 21 times higher than the FDI which Africa received in the same year. According to Kobylinski (2012, 3), Asia is Chinese ‘investment backyard’.

Figure 2 - China’s Outward FDI Flows by Region (2004-2010) (million USD)
Source: MOFCOM 2010
In 2011, the Chinese FDI in Africa increased to $12 billion (Moyo 2012). The largest African recipients of Chinese FDI are Nigeria, Algeria, South Africa, Democratic Republic of Congo (DRC), Niger, Egypt, Libya, Zambia, Sudan and Ethiopia. These ten countries received altogether $31.1 billion in 2012. Almost half of this amount was invested in Nigeria which received $15.4 billion and almost one third was invested in Algeria (Kobylinski 2012, 7). The investment in general is diversified and covers fields such as extractive sector, infrastructure, education, information technology, manufacturing, finance and construction industries (Ali and Jafrani 2012).

4.3.3 Official Development Assistance

The Chinese ODA is provided through grants, interest-free loans and concessional loans. The aid can come in various forms such as construction of turnkey projects, provision of goods and materials, technical cooperation and expertise, health assistance, debt relief and participation in volunteer programs (Cheng et al. 2012, 13). The Chinese Foreign Aid White Paper stated that 66% of the total Chinese ODA was received by least developed countries in 2009 (Provost 2011). In 2009, 45.7% was received by African countries as shown the pie chart below.

Figure 3 - Geographical Distribution of China's Foreign Aid Funds in 2009

Source: Chinese Foreign Aid White Paper

From 2009 to 2011, China built 100 schools, 30 hospitals, 30 anti-malaria centres and 100 clean energy projects. Chinese technical assistance between 2006 and 2009 aimed at training personnel, creating demonstration centres and also focused on agriculture. China set up 20 agricultural technology demonstration centres and by 2012 China has trained 40,000 African personnel in various fields (Jintao 2012; Embassy of PRC 2012b). By 2009, China cancelled 312 debts to 35 African countries worth $29.3 million (Government of the PRC 2011). In the field of culture, China constructed 29 Confucius Institutes in Africa, enabled 20,000 African students to take the government scholarship and contributed to the establishment of new platforms for cultural cooperation (Jun 2012; Jintao 2012).

4.3.4 Diplomacy and Political Cooperation

China supports major interests of African countries such as elimination of trade barriers, farm subsidies, debt relief and stronger representation in the UN Security Council (Konigs 2007, 361). Furthermore, China draws attention to the Millennium Development Goals (MDGs) and the aid commitments of developed countries towards the objective of Africa’s development (Jiechi 2012). African countries showed interest in the foundation of a new development bank, an alternative to the IMF and WB. The past decade was characterized by an increased number of diplomatic exchanges. From 2007 through 2011, China received leaders of 30 African states and 20 parliamentary speakers. In the last decade, 18 African countries received President Hu Jintao during his travels to Africa on four different occasions. Premier Wen Jiabao, Vice President Xi Jinping, Cabinet ministers and officials of the Communist Party of China also regularly visit African countries (Mancheri 2012; Embassy of PRC 2012b, Jianzhong 2012).

4.3.5 Military Cooperation

Although China claims to abide by the principle of non-interference, the recent support of Sudanese, Zimbabwean and Nigerian autocratic regimes is not compliant with this policy. Africa imports majority of small arms and light weapons from China (Enuka 2011, 18). As the 2011 SIPRI report showed, in 2010 China contributed by 25% of the total legal arms transfer to Sub-Saharan Africa and overtook Ukraine and Russia. Mozambique, Sudan, Ethiopia and Eritrea received Chinese military aid through training programmes, provision of weaponry and sales of arms (Beri 2007, 299). China was accused of trafficking arms into Liberia, Sierra Leone and Côte d'Ivoire (Enuka 2011, 22). Compared to other permanent members of the UN Security Council, China contributes the highest number of peacekeepers to Africa (Gosset 2012). In 2012, China participated in six UN missions in Africa and engaged 81% of Chinese peace-keepers (UN 2012).

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